8 Feb 2011

It's hard to avoid certain mistakes, especially when you first deal with such situations. In fact, many of the following errors are difficult to avoid even by people with experience though. Of course this is not the only mistake made by the CEO only, but this error is common. Perform self-assessment from the following list: give the value of ten points for each mistake you make employers. Subtract five points if you barely avoid it. Your score, of course secret, but asked for assistance. Quickly!

1. Large customer's Syndrome

If more than 50 percent of your revenue comes from customers who desperately you get. While working with a few big customers will be more easy and profitable, you can become brittle when one of them gives you pounce on cash flow. You tend to make a reckless decision to retain business. You make special investments to handle special requirements. And you are busy serving a large customer that you failed to develop additional customers and revenue flow. And then, for one reason or another, customers are gone and your business to collapse.

Use a well-developed account as a success and a sign of danger. Always find new business. And look for a different revenue source.

2. Creating products in a vacuum

You and your team have a great idea. Brilliant Idea. You spend months, even years, to apply these ideas. And when you bring it to market, no one was interested. Unfortunately, you've already fallen in love with your idea so that you never take the time to find out whether people are willing to spend money on it. You make a classic trap better.

Do not do a search product to market. Do it "market research" first. Test your idea first. Exchange ideas with potential customers, at least with 12 people. Find out why people want to buy it. Do this first before anything else. But better, sell the product with pre-release price. Find out in advance. If you are not getting a good response, continue to the next idea.

3. Partnership

Seumpana You are the greatest salesman, but you need someone to run the activity in the office. Or you are an expert in the field of engineering, but you need someone to get customers. Or maybe you and a friend start a business together. In each case, you and your new companion to share it 50/50. Looks like a good and fair distribution, but as professional and personal interests are different, then this is the beginning of the disaster. Power of veto both sides can turn off your company's growth and development, and do not have enough votes to change the situation. Almost as bad is ownership shared equally by the partnership in large numbers, or worse, with friends. Everyone has an equal vote and decisions are made by consensus. Or, still worse, by unanimous vote. No one who decides, every little decision becomes a debate, and things deteriorate rapidly.

To break it down according to Harry Truman, the money must stop somewhere. Someone must be responsible. Make the person as CEO and give stock ownership, though a bit more. 51/49 division is much better than 50/50. If you and your partner must have a total balance, give one percent of the shares on the outside advisers who would become binding.

4. Low Price

Some entrepreneurs think they can play in the market by providing lower prices and provide great benefits through a large volume. Are you willing to work with low wages? Why do you want to sell with lower price? Remember, gross margin payments for things like marketing and product development (and vacation travel). Remember, low margins = no profits = no future. So the bigger the better.

Determine your price as high as your market can be achieved. Even if you can sell more units and get a larger volume of revenues from lower prices (though not always the case) you may not be better. Make sure you do all the calculations before you decide to use a low price strategy. Consider all your expenses. Consider also that there are additional pressures. For service companies, low price is not a good idea. How do you decide how high? Raise the price. Then raise again. When customers or clients to stop buying, you've gone too far.

5. Insufficient Capital

Check your business assumptions. Normally, high sales projections, product development time frame is too short, and forecasting lower spending that is not realistic. And do not forget a weak competitor. Regardless of the cause, many businesses that lack of capital. Even companies that are ripe do not have cash reserves to the declining condition.

Be conservative with all your projections. Make sure you have sufficient capital through the sales cycle, or until the plan for the next round of funding. Or as much as possible reduce costs.

6. No focus

If your business is like most companies, you do not have the time or people to pursue every interesting opportunity. But many entrepreneurs - who want to benefit quickly and think more is always better-felt need to catch any business opportunities that exist in front of him, instead of focusing on core products, services, markets, distribution channels, and feels the need to expand each section previously existing business, rather than focus on, product, service core, Fairway distribution. Too weak to develop yourself will result in poor performance.

The concentration of your attention on a limited area would give an average result is better, often surpass the benefits arising from diversification.

There are so many good ideas, your task is to choose one that provides returns in the area that concerns you. Identify a niche that your skills, and do well.

7. The main class and excitement infrastructure

Many start-up businesses collapsed due to excessive overhead costs. Try to save money and buy a cheap furniture. Your management team should have resulted in large amounts as compensation when profits increase, rather than before it. The best entrepreneurs know how to manage finances and use it as a key process to build a business such as product development, sales and marketing. Leave a redundant telephone system unless it saves time and helps get more sales. Use the money only for things that are important to achieving your goals. Ask a question, is there sufficient return for this expenditure?
8. Demanding perfection

It is often found in engineers who will not launch products until completely perfect. Remember the 80/20 rule? Follow this rule to its logical conclusion, complete at least 20 percent from 20 percent last could lead to cost more than you spend on the rest of the project. At the time of developing the product, use the rules of Zeno paradox. Perfection can not be achieved and costly. Plus, when you fix it, the market is changing right in front of you. Above all, customers delay buying your product that already exists and is waiting for something new that you'll spend.

Antidote? Focus on creating a product that can beat the market within the specified time. Set deadlines and make the appropriate product development plans. Know when you should stop the development to determine the date of delivery. When your time is up, then it is finished. Launch your product.

9. There is no clear return on investment

Can you articulate the return that comes from purchasing products or services? How much additional business could be given to your customers? How much money can they save? Do you think it difficult to measure? Too many intangible? If for you it's too hard to describe, what prospects do you expect? Perform analysis. Talk to your customers, create a case study. Ask how to measure its benefits. If you can not judge a purchase, do not expect your customers will do the same.

10. Does not admit mistakes

Of all the mistakes, this is the greatest. At some point you realize the painful truth: you make a mistake. Immediately admitted. Fix the situation. If not, the error will become bigger, and bigger, and sometimes it is difficult, but, believe me, bankruptcy is more difficult.

Think of your costs shrink. Your money is lost. The good news: your base zero. From this perspective, whether you will invest fresh funds for this idea? If the answer is no, walk away. Immediately replace. Whatever it is. But do not spend money after a bad incident.